[torben-friis]

>I feel like letting people buy their way in to visas is actually a pretty good system

That depends of what you're hoping to prevent.

If you want to filter out people who can't sustain themselves, petty crime or the like, it works. But it can open the door to a lot of unwanted effects.

A foreign national that just extracts capital by capturing real state and collecting rent is a great example, this person is a large net loss for the country.

[rwmj]

> A [person] that just extracts capital by capturing real state and collecting rent is a great example, this person is a large net loss for the country.

Even to their home country.

[junon]

Genuine question: how so? I'm not familiar with the economics of this.

[toss1]

The short answer is this an exemplar of the distinction between generating income by producing vs generating income by rent-seeking.

Producing something, goods, services, useful information, etc. is a net plus for society, adding value for both the producer and the consumer, making the society overall richer.

Rent-seeking is purely extractive - it extracts value from the consumer, and in the cases where the extractor is outside of the society, e.g., a foreigner or oligarch-type, it extracts value from the society, leaving the society poorer.

[bouncycastle]

Many positives. For example, the buildings get to be maintained and left in a better condition, rather than deteriorate. Streets look better too, and landrods have an interest that their assets are located in areas with low crime and adequate public services, as that improves the value of their properties. Often airbnb properties are well maintained, and I've seen a few examples where derelict properties were turned into nice looking houses in my town.

Landlords such as Airbnb hosts usually invest a lot in furniture and equipment, helping to keep the producers in business. Not to mention provide employment thanks to renovations, cleaning and maintenance. I'd say it leaves the economy more vibrant and benefits all. A classic example where landlords were banned was the Soviet Union, and all the housing problems that followed. Although the USSR finally collapsed, people there still live in the old Khrushchevkas...

[toss1]

>>Many positives....buildings get to be maintained

Sure, let's talk about second-order effects as if they somehow contradict the main issue of extracting all profit.

Yes, to the extent there is investment that returns to the local economy, both as good/services purchased locally, and assets that remain local. that is a positive. But remember, these are ALL ostensibly profit-making ventures. To the extent the profit leaves the local/national economy, it is an absolute negative. If the landlord is a local, and their profits are spent locally, it is all positive. When the landlord is foreign or doesn't participate in the local economy, it is a hard negative. And a foreign or corporate-/oligarch-ish landlord has no incentive to put anything back into the local economy, or maintain the buildings beyond the minimum, so any positive effects are minimized contrasted with a local landlord who might take pride in his buildings & reputation and participate in community building because it is his community too. (Obviously exceptions exist, but exfiltrating the profits is a pure net negative.)

AS for your AirBnB argument, it is fabricated fantasy. There may be isolated instances where it is a positive, but I've recently read reports from four continents how both movements and laws are underway to attempt to undo the damage AifBnBs do to communities; you conveniently ignore this while tacitly arguing against it. The fact is, even as an AirBnB guest, remote owners suck, while on-site owners are typically great (I just enjoyed one of the best examples last week). The remote owners superficially spiff up the place so it takes good pics, but do the absolute bare minimum of short-term maintenance, while the on-site owners renting out parts of their own building actually invest in the property.

And overall, the influence of turning a substantial number of buildings into short-term rentals is pernicious. The people staying in those buildings by definition have no investment in the local economy, culture, or society, so they do nothing to help the commons issues. The reduced housing stock droves up rental rates for actual locals, allowing often remote landlords to extract more money from a declining community. It is effectively two methods of stripping assets and wealth from a community, effectively making it poorer — please explain how involuntary impoverishment makes improvements in the life of a community or it's individual people.

[junon]

Seems nobody has read the comment I'm responding to. I understand this part. They're saying it is detrimental to the home country. Why?

[nradov]

Efficient capital allocation is a net positive for society.

[toss1]

"Efficient" for whom, over what time-frame, and by what definition?

"Efficient capital allocation" is another hand-wavey concept with no clear definition which is far too often used to justify fundamentally evil results, up to and including arguably the most massive and fundamentally stupid strategic blunder in history.

The USA was the worlds remaining superpower and was democratic.

But based on "efficient capital allocation", the USA decided it was more "efficient" to offshore its "fungible" labor to cheaper Chinese workers. This gutted entire regions and sectors of the economy, literally destroyed the middle class which formed the basis of stability in the country, and handed to an adversarial authoritarian regime both numerous choke-points on it's economy and defense capabilities and technological advantages sufficient to turn it into a serious peer-threat. On top of that, the gutting of the economy brought about conditions for a full-on assault in democracy in the USA.

You seriously need to rethink your "philosophy" based on glib quips.

[junon]

I understand why it's not great for the target country. I'm asking why GP said it was bad for the home country.

[margalabargala]

It's bad for wherever the person happens to be operating.

[junon]

Which is the target country. Not what I'm asking about.

[ecshafer]

Rent extraction is bad, since it hurts productivity. Ill admit I am an unabashed Georgist, but the book Progress and Poverty by Henry George is pretty accessible. But basically this: Capital and Capitalists are good, they have money, then lend it for ownership, this creates innovation. Labor is good, you need workers, they work, they produce, its good. But Rent (extracting value from land, patents, etc.) is just a negative drain, labor has to pay rent, capital has to pay rent, but they don't really innovate and grow the economy.

[junon]

But what about their home country?

[embedding-shape]

The general feedback loop is "have lots of money === easier to make more money", and doing so via passive approaches like "own property, rent it out" basically spirals out of control to a few owning a lot, unless you try to restrict it somehow. Add in that "vacation rentals" is hugely interesting for real estate owners as you get so much more per owned property, and suddenly local residents are even harder hit by property not being available even for long-term rent anymore. Final drop being that the real estate owner doesn't even live, work or spend their money in the country of the property itself, and suddenly it's basically all downside for the country and the people living there.

[nradov]

The notion of earning "passive income" as a landlord is a total fantasy. The reality is that it takes a lot of work. Otherwise tenants, vendors, and property managers will wreck the assets and rob you blind.

[embedding-shape]

> The reality is that it takes a lot of work.

You can outsource pretty much the entire thing, and just be a name on a paper, and receive money in your bank account, that's as close to "passive income" as you can get. Lots of people do this today, pretty common for landlords to do so in Spain for example, and I'm sure all around the world.

[everforward]

I tried this once and it wasn’t great. It was a single home, and in a college neighborhood (house was cheap, ergo rent was low).

The rent paid the mortgage, but that was about it. Repairs were more or less out of pocket.

I gave it up because I didn’t live locally and got raked over the coals on repairs a couple times. I finally quit because the property managers had an “emergency repairs” clause where they could do repairs without my approval and bill me.

One of the renters clogged the toilet at 11pm on a Saturday, moron decided to call the property management because I guess plungers are confusing, they decided that was an emergency, and I got a $700 bill to send a plumber out at midnight to plunge a toilet. Like not even a roto rooter or something, just a generic grocery store plunger.

Became clear I was either a) going to have to be much more involved, or b) accept that the returns are basically just equity in the house on a 15 year mortgage, minus overpriced repairs.

[broken-kebab]

>You can outsource pretty much the entire thing

This is probably the fantasy part.

Quality of maintenance, honest, doesn't take all the money - you can pick only 2 of these for your property operator. Actually, you have to be lucky to get 2.

If it works great and you aren't involved in solving constantly incoming troubles, you're earning peanuts.

[alistairSH]

100% this.

My parents had a beach house for a while. It was rented May-Sept every year. They'd visit for a week in each shoulder season, spend half the time doing major cleaning/fixing, and left the day-to-day during rental season to a management company (same one that managed bookings for the house).

It wasn't 100% passive, but it was about as close as you can get as a retired upper-middle-class couple.

[junon]

https://news.ycombinator.com/item?id=48541141

[embedding-shape]

Did you miss the last part?

> suddenly it's basically all downside for the country and the people living there

[junon]

For the target country, i.e. the country with the rental. The comment I'm responding to implied it's also bad for the extractor's own home country, and I was asking how that could be if the money is being injected into their local economy.

[nradov]

If foreign nationals are able to extract a lot of capital through rents then that's a sign that the government has made it too difficult to develop new rental housing.

[mitthrowaway2]

This really isn't the case in Japan. It's extremely easy to develop new rental housing, and rents are fairly low.

However, it can be difficult for foreigners without a Japanese support network (like a blue-chip employer) to rent property in Japan at market price, because of discrimination by landlords. This isn't because of government policy, it's because building managers have the impression, mistaken or otherwise, that foreign tenants won't respect the rules, will be difficult to communicate with, or might skip town with unpaid rent.

[braiamp]

Or that capital has captured the regulators and are happy with it.

[Gareth321]

> A foreign national that just extracts capital by capturing real state and collecting rent is a great example, this person is a large net loss for the country.

Is this a creative way of arguing that landlords are a net loss for the country? Because I would like to remind you that MANY people cannot afford to buy homes, and renting is how they make sure they don't become homeless.

[myrmidon]

I'm from a region negatively affected by this.

Foreign capital is undesirable in the housing market because:

1) It raises demand (when buying a home as a local, you now also have to compete with foreigners "investing", and this raises prices).

2) It often develops housing in a very unhealthy direction: Airbnbs and vacation apartments are toxic for local society and must be kept in check, otherwise you end up with half the houses just being shuttered for the whole off-season, and towns becoming empty husks.

3) Rent is a lot of money, and its obviously beneficial if it stays in the local economy instead of flowing abroad.

[nradov]

Why is there insufficient new housing development in your region?

[braiamp]

Because that implies more supply and landlords are happy with the supply being restricted. The people that has the money to build won't, the government will follow the money, so the state doesn't help. That kind of question reeks to "why are you poor?", well, because I have no money!

[myrmidon]

I don't think there is, really, but plenty of potential housing (and also the cost of construction) is pressured by "pseudo-housing" (Airbnb, vacation apartments, boutique hotels), often fueled by foreign capital.

[braiamp]

So, you changed topics from airbnb, which removes units from the rental market, to landlords in general? I think I can play that game. Lets go for the easiest one against landlords: Renting being the alternative to homelessness isn't a feature, it's a failure of housing policy. Homeowners carry 400% more net wealth than renters with comparable income, normalizing a rental market just means normalizing a wealth gap.

[torben-friis]

>Is this a creative way of arguing that landlords are a net loss for the country?

Not landlords as a general concept, but there are many categories that are:

- Investors buying areas in bulk to monopolise available living space and manipulate prices

- Demand of renting space by investors making purchases unaffordable

- Temporary living space (Airbnb, etc) removing long term residence offer.

- Foreign investors exploiting living space from abroad, since the money extracted from rent will not be reinvested in the country.

The usual free market response to this is "more offer will even out demand". But there's lots of obstacles to this in real life. Regulatory capture, high upfront costs that limit builders, near inhexaustible demand by investors and tourism, etc.

[ffaccount2]

And MANY people, like me, can afford to buy a home, butprefer to rent anyway.

[Scoundreller]

Or you end up with some weird scenario where so many are drunk on “real estate only go up” and rents become cheaper than owning.

I guess that’s a good thing (for voluntary renters… not so much for involuntary renters) but not really supposed to happen.

[gacgacgac]

Why do you assume it has to be landlords providing inexpensive, short term housing?

[f17428d27584]

1) renting is not the only way for a society to create affordable housing

2) rent being the only way to afford shelter has zero relation to whether it is a net loss or not